Panel to Decide on Aussie Airline Merger

Published 8:00 pm, Sunday, June 1, 2003

Australia's competition watchdog said Monday it hoped to make a decision on a proposed merger between Qantas and Air New Zealand this month.

Allan Fels, chairman of the Australian Competition and Consumer Commission, said he wanted to have a decision ready on the deal before he steps down from his post on June 30.

"The commission will proceed to make a final decision possibly this month," he told reporters Monday.

The two airlines are seeking clearance from competition and corporate regulators in both countries for Qantas to buy a 22.5-percent stake in Air New Zealand, injecting 550 million New Zealand dollars ($312 million) into the carrier. They announced the deal last November.

Fels' commission and its New Zealand counterpart both rejected the merger in draft rulings in April. They said the merger as it had been proposed was anticompetitive and could lead to higher airfares and freight costs. They asked the airlines to present new arguments.

Fels said new arguments were being presented to his Commission now, after the two airlines announced last month new concessions to persuade regulators to approve the alliance.

The concessions include capping some airfares on routes between Australia and New Zealand and allowing a new entrant _ mostly likely budget carrier Virgin Blue _ "unimpeded access" to the market between the two countries and to the New Zealand domestic market.

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Asked if the new arguments were helping to sway the regulator in favor of the alliance Fels said: "I wouldn't like to comment when we're right in the middle of considering our final position on that matter."